Life Insurance – ERISA – Part 4

This post is a continuation of Parts 1, 2, and 3, posted earlier.  This case involves a life insurance policy claim denial that is governed by the Employee Retirement Income Security Act (ERISA).

The opinion is from the Southern District of Texas, Houston Division, and is styled, Erica Talasek v. Unum Life Insurance Company of America, et al.

As in most ERISA claims, the case is being decided on competing Motions for Summary Judgement.  The Court found in favor of Unum and explained it’s finding in detail.

The Court discussed the standard of review that often applies in ERISA cases and then spent considerable time on the theory of ERISA estoppel.  The elements of ERISA estoppel are: (1) a material misrepresentation; (2) reasonable and detrimental reliance upon the representation; and (3) extraordinary circumstances.  The first two of these elements have previously been discussed.

The third required element of ERISA estoppel, “extraordinary circumstances,” generally requires “(1) acts of bad faith; (2) attempts to actively conceal a significant change in the plan; (3) the commission of fraud; (4) circumstances where a plaintiff repeatedly and diligently inquired about benefits and was repeatedly misled; or (5) an especially vulnerable plaintiff.”  Thus, mistakes or oversights do not constitute extraordinary circumstances, but “acts of bad faith on the part of the employer, attempts to actively conceal a significant change in the plan, or the commission of fraud” can evidence extraordinary circumstances.

Although Ben’s death from cancer at a young age and his family’s loss of a husband, father and breadwinner are tragic, no “extraordinary circumstances” warrant an award of damages based on ERISA estoppel.  The evidence does not support a finding that NOV intentionally collected excessive premiums from Ben Talasek or sent him inaccurate benefits statements in bad faith.  NOV remitted the premiums to Unum and did not profit from its error.

Plaintiff also argues she is an “especially vulnerable plaintiff,” comparing herself to the plaintiff in another case decided by the Courts.  The comparison is inapt.  The Plaintiff in that case who was also the insured employee under her employer’s ERISA plan, was a “single woman solely responsible for her own care and support” who “was already experiencing cognitive decline at the time of the relevant misrepresentations were made.”  Plaintiff does not allege or present evidence that she or Ben were suffering from cognitive decline at the time of the alleged misrepresentations or their alleged reliance on them.

Because Plaintiff cannot create a genuine issue of material fact as to each element of an ERISA estoppel claim against Unum or NOV, the Court recommends that their motions for summary judgment on Plaintiff’s ERISA estoppel claim be granted.

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